District Energy Now

The International Energy Agency has published a report which examines the energy efficiency and economics of alternatives for combining district cooling with cogeneration. The report, entitled "Integrating District Cooling with Combined Heat and Power," was prepared by Mark Spurr of Resource Efficiency, Inc. and Ingvar Larsson, currently with District Energy St. Paul.

The report addresses: the thermodynamic fundamentals of cogeneration and cooling, providing a conceptual foundation for later quantification of the efficiency of alternative cooling/cogeneration options; the efficiency, air emissions and economics of alternative cogeneration technologies (gas turbine, reciprocating engine, steam turbine and gas turbine combined cycle); the efficiency, refrigerant environmental impacts and economics of alternative cooling technologies (electric centrifugual, steam turbine centrifugal, one­stage steam absorption, two­stage steam absorption and hot water absorption); review of fundamental aspects of district heating and cooling systems which are relevant to integrating district cooling with cogeneration; the efficiency and economics of integrated cooling/cogeneration technology alternatives, including presentation of economic formulas, discussion of key economic variables and calculation of cooling costs for illustrative hypothetical scenarios; and case study examples of integrating district cooling/cogeneration.

Copies of the report are available from the appropriate country representative on the Executive Committee for the IEA Implementing Agreement on District Heating and Cooling. Representatives for the U.S. and Canada are, respectively: Floyd Collins, U.S. Department of Energy (phone 202­586­9191); and Michael Wiggin, Energy Mines and Resources Canada (phone 613­996­8870). For other countries, contact the Operating Agent for the Implementing Agreement (Frank van Bussel, Netherlands Agency for Energy and the Environment, phone 31­46­4595295, FAX 31­46­4528260). The identification number of the report is 1996: N1, ISBN 90­72130­87­1.

A presentation on the report will be given by Mark Spurr at IDEA's 87th Annual Conference in June.

FERC Issues Open Access Rule

In April the Federal Energy Regulatory Commission (FERC) finalized new rules requiring transmission comparability, utility standards of conduct and a computerized information system. FERC also proposed a new capacity reservation tariff system.

The long­awaited transmission comparability rule, known now as Order 888, remains essentially unchanged from the proposed rule, known as the Mega­NOPR, issued 13 months ago. It requires utilities to open their transmission lines to competition, gives them the opportunity to collect their full stranded costs and asserts FERC authority over the interstate transmission portion of unbundled retail power transactions.

But it does contain at least one major addition: power pools, registered holding companies and utilities with bilateral coordination transactions must remove by Dec. 31 any transmission access and pricing provisions that favor their own transactions and discriminate against outsiders. They must replace those agreements with pool­wide, system­wide or joint pro forma tariffs. Utilities have 60 days from the rule's publication in the Federal Register to file tariffs that conform to FERC's pro forma tariffs.

On stranded costs, FERC retained its jurisdiction over wholesale stranded costs and restated its claim of jurisdiction over stranded costs caused by municipalization­­when a retail customer of a utility becomes a wholesale customer. FERC said that straight retail stranded costs remain the province of the states.

In what many consider a significant move toward trying to make transmission allocation and pricing easier, FERC proposed a new single capacity reservation open access tariff­­much like the natural gas pipeline tariffs­­that would replace the existing load­based network and capacity­based point­to­point system. Under the proposed system, utilities and all other power market participants would reserve firm rights to transfer power between designated receipt and delivery points.

Individual commissioners voiced support not only for the final rule, but also for the controversial environmental impact statement that backs it up. The EIS has created considerable friction within the administration, with the Environmental Protection Agency and political leaders from the Northeast vehemently opposing it. However, FERC stands by its plan as the definitive environmental and economic assessment of open access: There will be no increase in emissions before 2001, and the increased efficiencies of open access will result in consumer savings of between $3.8 billion and $5.4 billion a year.

Climate Change Issue Heats Up

After essentially lying dormant since the 1994 elections, climate change is again emerging as an issue in the U.S. due to a number of factors: there is now a solid international scientific consensus that climate change is a critical problem requiring action; there has been a public backlash against efforts in the Congress to dismantle environmental programs; and President Clinton is now far stronger in a general political sense than he was a year ago.

The scientific consensus is expressed in the Second Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), which is expected to be published eminently. That report discusses the measurement and impacts of climate change, and lists "promising approaches" for reducing greenhouse gas emissions, starting with: "More­efficient conversion of fossil fuels (e.g., combined heat and power production and more efficient generation of electricity)."

Congressional proposals to roll back or eliminate environmental programs have stalled as legislators realized the strong level of public concern about environmental issues. A survey conducted in Dec. 1995 indicated that 71% of registered voters nationwide feel that global climate change is either "very serious" (35.5%) or "somewhat serious" (35.4%). Given the clear public concern about the environment, and given the administration's overall political revival, President Clinton and Vice President Gore have again begun speaking out on the climate change issue.

At the same time, greenhouse gas emissions continue to climb. According to recent estimates by Economic Research Associates, U.S. energy­related carbon emissions reached 1,409 Million Metric Tons (MMT) in 1995, an increase of 5% (65MMT) compared with 1990. This finding confirms a continuing inability by the U.S. to meet the international Climate Change Convention target of reducing greenhouse gas emissions to 1990 levels by the year 2000.

The European Commission recently committed to producing a European Union cogeneration strategy in 1997 as part of its overall energy efficiency and CO2 reduction strategy. With the Clinton administration again actively addressing the climate change issue, IDEA will be working to advance district energy/cogeneration systems as an important element in U.S. climate change strategy.

EPA Planning New Strategy for Regulating Utility Emissions

The Environmental Protection Agency is expected to release this summer a preliminary strategy to control air pollution from the electric utility industry. The strategy will attempt to consolidate a slew of requirements utilities will face over the next decade into one plan of action. The agency expects to complete an initial proposal by July.

EPA's utility strategy, dubbed the "Clean Air Power Initiative," will focus on three pollutants the agency has "clear statutory authority to regulate" ­­ sulfur oxides, nitrogen oxides, and mercury. The intent of the initiative, said EPA, is to assure public health and environmental protection while providing the power generation industry with more certainty of future regulatory requirements.

Mary Nichols, EPA assistant administrator for air and radiation, said in a statement that EPA will consider forgoing implementation of certain statutory and regulatory requirements for utilities if the goals of these requirements can be accomplished under the Clean Air Power Initiative.

Nichols added that the initiative is particularly important in light of recent efforts at the federal and state levels to increase competition in the electric power industry. She said these developments "dramatically underscore the need to provide clear guidance on the nature and timing of emission reductions that will be required to meet air quality standards."

EPA said a regulatory approach that incorporates a "cap and trade" emission trading scheme would be appropriate for controlling sulfur dioxide, NOx, and mercury. Such an approach was established by the Clean Air Act for regulation of sulfur dioxide emissions under EPA's acid rain program. In an analysis of integrated control schemes it is considering, EPA said a trading approach "leads to similar environmental benefits at a much lower cost" than command­and­control approaches.

California Utilities Plan Competitive Power Pool

Three California utilities filed a plan on April 29 with the Federal Energy Regulatory Commission (FERC) which would radically transform the power industry in that state. The state's three leading private utilities ­­ Pacific Gas & Electric, Southern California Edison and Enova Corp. (formerly San Diego Gas and Electric) ­­ would compete in the generation of power with power companies from 14 Western States, two Canadian provinces and a Mexican state, starting in 1998. The utilities would turn over control of their transmission systems to an independent operator.

Although the cost of power is expected to drop, the rates consumers pay may not fall at first as utilities charge additional fees to recover stranded costs.

The California plan is expected to become a model for other states, such as New York and Massachusetts, which are developing their own proposals for restructuring.

Fuels Forum Changes Name

The Fuels Forum has expanded its scope and changed its name to better identify the issues that the forum deals with. Previously known as the Fuels Forum, the new Fuel & Power Management Forum will continue to be chaired by Joel Greene of Ball, Janik.

In the past year, the forum assisted in putting together part of the College/University Conference. Joel Greene organized and moderated the sessions on Retail Wheeling. These and other issues dealing with fuel and power are the kind of issues that this forum will continue to deal with in the future.

If you are interested in learning more about the Fuel and Power Management Forum, please call Joel Greene at (202) 638-3307. If there is interest, there will be a forum meeting scheduled during the 87th Annual Conference.

Minnesota Reduces Taxes for Efficiency

The Minnesota State legislature recently passed a law which reduces property taxes on new or existing electric power generation facilities based on efficiency. Taxable market value is reduced 5% for each 1% of efficiency above 35%. Efficiency is defined as the sum of:

1. the useful electrical output; plus

2. the useful thermal output; plus

3. the fuel energy of the useful chemical products,

all divided by the total energy input to the facility, expressed as a percentage.

Article from District Energy Reprinted in Chinese

The article, A Ice Storage Puts Cooling Costs on Ice, @ by W.D. McCloskey of Baltimore Aircoil Company, was reprinted in a recent issue of HVAC in China. The article originally appeared in the third quarter 1995 issue of IDEA = s District Energy magazine.

Sebesta Blomberg Opens New Office

Sebesta Blomberg & Associates, Inc., an IDEA member consulting engineering firm, has announced the opening of an office in Chicago. The office will be managed by Jakub Grodnicki, formerly engineering manager of Kraft Foods, Inc. The Chicago office will provide mechanical and electrical engineering services to institutions, industry, government, and utilities.

IDEA Performs Member Needs Assessment

As part of our Long Range Planning process, IDEA is conducting a Member Needs Assessment. The survey is an opportunity for the members to tell IDEA how well the association is doing in meeting your needs and those of your organization.

To ensure the confidentiality of all responses, and to obtain an independent analysis of overall member benefits, opinions, and concerns, Association Research, Inc. (ARI), an independent survey research firm that specializes in associations, was selected to administer the survey and to tabulate the results.

All members should complete and return the survey by May 21, 1996. If you have any questions about this survey or need a copy, please call IDEA directly at (202) 429-5111 or call Michael Sherman, ARI President, at (301) 948-1262.